Korean e-commerce player Coupang set for US listing

The company’s most recent funding round came in 2018, when SoftBank Vision Fund committed $2 billion at a post-money valuation of $9 billion. The same investor put in $1 billion at a valuation of $5 billion in 2015, capping a 12-month period in which Sequoia Capital and BlackRock Private Equity Partners led rounds of $100 million and $300 million. The valuations were $1 billion and $2 billion.

Vision Fund, Greenoaks Capital Management, Maverick Capital, and Disruptive Innovation Fund – which is managed by Rose Park Advisors – are the only investors listed in the prospectus because their individual holdings exceed 5%. Coupang’s other backers include Wellington Management and Altos Ventures.

The size and pricing of the offering have yet to be decided. The Wall Street Journal reported that Coupang is expected to achieve a market capitalization in excess of $50 billion, registering the largest US offering by a foreign company since Alibaba Group. The Chinese e-commerce giant completed a $25 billion IPO in 2014 with a market capitalization on listing of $68 billion.

Coupang was founded in 2010 by Bom Kim, who remains CEO and chairman. It is a dominant player in Korea’s e-commerce space alongside rival marketplaces Tmon, backed by KKR and Anchor Equity Partners, and Wemakeprice, which counts IMM Investment among its investors. Several traditional retailers – notably Shinsegae – are also pushing into e-commerce.

Coupang reached $1 billion in annual gross merchandise value (GMV) in 2013 – faster than any other company globally - and it reportedly surpassed $10 billion in 2019. Revenue came to $11.9 billion in 2020, up from $6.3 billion in 2019 and $3.8 billion in 2018. At the same time, net losses narrowed to $474.6 million in 2020, from $699 million and $1.1 billion in 2019 and 2018, respectively.

In addition to developing its mobile apps, Coupang has invested heavily in end-to-end fulfillment, best exemplified by its Rocket Delivery service. The company promises next day or faster free delivery for nearly 100% of orders, with some users able to place orders as late as midnight and receive the goods before 7 a.m. the following day.

As of December 2020, Coupang claimed to have built the largest B2C logistics footprint of any e-commerce player in Korea, with over 100 fulfillment and logistics centers – encompassing over 25 million square feet – across 30 cities. It also has the country’s largest directly employed delivery fleet comprising more than 15,000 full-time drivers.

Innovations in recent years include Rocket WOW, a membership program that offers unlimited free shipping with no minimum spend for a flat monthly fee; Rocket Fresh, a fresh grocery delivery business; and Coupang Eats, which the company claims to be Korea’s largest online food delivery platform. Delivery Hero recently won approval to buy local pure-play food delivery business Woowa Brothers for $4 billion.

Approximately 70% of Koreans live within seven miles of a Coupang logistics center – underlining the power of online-to-offline solutions in a Korean market that is relatively concentrated in geographical terms and has a higher smart phone penetration than any other country in the world. Nevertheless, Coupang notes that it accounts for a small portion of a rapidly growing area.

Total spending on retail, grocery, consumer food services, and travel was $470 billion in 2019 and is expected to hit $534 billion in 2024. Over the same period, e-commerce spending is projected to rise from $128 billion to $206 billion. E-commerce spending per capita will reach $4,300, up from $2,600.

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• Topics
• North Asia
• Technology
• Consumer
• IPO
• South Korea
• TMT
• Softbank
• Sequoia Capital
• BlackRock
• Greenoaks Capital
• Wellington Management
• Altos Ventures